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Compliance in International Private Medical Insurance Gathers Pace

Posted on Oct 10, 2012 by Sergio Ulloa ()  | Tags: Aetna Global Benefits, Allianz, BUPA, China, China Insurance Market, Health Insurance, International Health Insurance, Munich Re, Singapore

In a move that has caught agents and brokers off guard, Nordic Healthcare, a provider of international health insurance, has announced that it will cease sales of new individual policies in all but its core markets.  This means that, with immediate effect, Nordic will no longer be issuing new IPMI policies anywhere in the world except Europe, Singapore, Hong Kong, Thailand and Vietnam. The announcement deals mainly with individual clients, it is understood that corporate business will be assessed on a case by case basis. This announcement follows close on the heels of Nordic's announcement earlier this year to pull out of South America. Although Nordic will no longer be accepting new business in areas outside of the aforementioned countries, it insists that all existing policies will continue to be renewed and that customers with policies currently in force will not be affected in any way, a move that is warmly welcomed by clients and intermediaries. To date, Nordic has continued to treat its existing customers fairly and  continued to support them even after pulling out of selling new business in a particular market. The move appears to be an attempt by Munich Re, the owners of Nordic, to make the Nordic Healthcare business more compliant. Historically many international private health insurance providers were prepared to sell a policy to an expatriate in almost any country, particularly to individuals. The nature of the business and associated regional regulation, means that insurers, mostly based and licensed in Europe, have been selling policies to client anywhere in the world in an uncompliant way. All insurers are regulated in their home country, but because international health insurance policies are aimed at non nationals and are sold by foreign brokers or insurance companies, they fall into a grey area (particularly individual policies) which makes it difficult for local regulators to exercise any oversight of their operations. Most regulators require an insurance company to have a local presence before it can sell insurance products to nationals, but it is not always worth the investment for an insurer to open a local office if the IPMI market in a particular country is very small, and in many countries the legal requirements to be registered as an insurance provider represent a large financial commitment. In the past twelve months, many insurers have been making efforts to become regulated in key markets. Recent moves by Bupa and Allianz in China and Aetna in Singapore are early indicators of an industry wide shift taking place. This drive to be more compliant  explains Nordic's actions as far as most of Asia is concerned, withdrawing from poor or developing countries with very small expat populations will not affect Nordic's balance sheet much. What is puzzling is that they have also stopped selling new policies in China and South America, some of the biggest emerging markets around. Nordic is the only European insurer to have made such a massive exodus, it has obviously deemed the risks high enough to justify pulling out of such potentially lucrative markets. Whether this move is reflective of internally motivating factors for Nordic Healthcare or whether it is more indicative of issues brewing in the wider IPMI market is difficult to tell. It is possible that Munich Re will follow the lead of Bupa and launch a locally based IPMI product in China, where it is seeing 20% annual growth in its reinsurance business, and is clearing the way for a similar move by pulling Nordic's operations from the region. It is hard to imagine Nordic have completely abandoned the region since China is such a valuable market for all types of insurance business. While there is bound to be more than regulatory pressure involved, right now, we can only speculate as to what is really happening, whilst keeping an eye out for more developments that are sure to follow soon.
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